BTL Still worth doing ?
Discussion
Have long pondered doing BTL but never really been in a position to do so, myself and my wife are mid forties and our house is owned outright, was thinking that I have 20 years left to work or therabouts, if I started a BTL now then by the time I am ready to retire that the property, assuming 20 years of the rental paying the mortgage would be paid off ?
Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
I have been pondering the same thing , my decision was we've missed the boat by about 10 years , the gubbernment are going to clamp down harder on the BTL industry (IMO) and try to close the door on it , so my decision was to lump the maximum cash into my pensions before the gubbernment close the doors to that too.
It's never too late for a long term investment like that, so long as you ensure that you don't over-leverage yourself it makes as much sense now as it ever did. There is no question over the long term investment value of property and Brexit won't make a blind bit of difference.
If you look back through the archives, this question is asked every year and the answer is always the same, every year - missed the boat, property crash, government intervention etc. No one really knows what is in store in the short term, but you can be sure that it is a bricks & mortar investment in the long term.
It might make sense to take equity out of your home, by way of a decent offset mortgage and use that cash to fund the other property.
If you look back through the archives, this question is asked every year and the answer is always the same, every year - missed the boat, property crash, government intervention etc. No one really knows what is in store in the short term, but you can be sure that it is a bricks & mortar investment in the long term.
It might make sense to take equity out of your home, by way of a decent offset mortgage and use that cash to fund the other property.
J4CKO said:
Have long pondered doing BTL but never really been in a position to do so, myself and my wife are mid forties and our house is owned outright, was thinking that I have 20 years left to work or therabouts, if I started a BTL now then by the time I am ready to retire that the property, assuming 20 years of the rental paying the mortgage would be paid off ?
Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
If you buy places outright for cash or minimal leverage it might be ok as a diversified investment strategy (combined with superannuation, maybe some blue chip stocks paying decent dividends, your primary residence etc). The major change being introduced over the next few years is not being able to offset the interest expenses on a btl mortgage from a tax perspective. So you ultimately get taxed on the gross rental return less other allowable deductions (the interest expense on the loan usually being the major one though). So leveraging up to get into btls going forward is not going to anywhere as attractive as it once was. Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
bigunit00 said:
If you buy places outright for cash or minimal leverage it might be ok as a diversified investment strategy (combined with superannuation, maybe some blue chip stocks paying decent dividends, your primary residence etc). The major change being introduced over the next few years is not being able to offset the interest expenses on a btl mortgage from a tax perspective. So you ultimately get taxed on the gross rental return less other allowable deductions (the interest expense on the loan usually being the major one though). So leveraging up to get into btls going forward is not going to anywhere as attractive as it once was.
IIRC the interest will still be able to be offset but it will be reduced to the basic rate only by 2021.Never too late but it's not for everyone it has it's pros and cons I've been doing it on and off since my early 20's. Only really had one bad set of tenants when I was in student rentals never again.
Like you it will remain as part of my pension. Right move will tell you what rental prices v purchase prices are like in your area and from that research you can work out what percentage return you are likely to get.
There are loads of threads in here about it.
Like you it will remain as part of my pension. Right move will tell you what rental prices v purchase prices are like in your area and from that research you can work out what percentage return you are likely to get.
There are loads of threads in here about it.
BTL can be a challenge at times. Tenants who don't pay, trash stuff or don't treat the place like you would yourself can all make things difficult
If you are happy to live with the above then BTL is a good way to drive capital appreciation and income
My perspective is that it's a better bet than a pension, the stock market or other investment vehicles - that's not to say I don't invest in these too but I think housing is the best bet
We have a finite supply of land in the uk, an even more finite supply of houses. Bricks and mortar is a strong bet in the long term especially if someone else pays your mortgage for you to buy it
If you buy correctly, usually a distressed sale then the rewards are there to be reaped.
If you are happy to live with the above then BTL is a good way to drive capital appreciation and income
My perspective is that it's a better bet than a pension, the stock market or other investment vehicles - that's not to say I don't invest in these too but I think housing is the best bet
We have a finite supply of land in the uk, an even more finite supply of houses. Bricks and mortar is a strong bet in the long term especially if someone else pays your mortgage for you to buy it
If you buy correctly, usually a distressed sale then the rewards are there to be reaped.
Cheers all, going to start properly doing my homework, sounds like my approach of long term gain is the way to look at it, the get rich quick thing is perhaps over and its more of a slow burner.
Do those who do BTL tend to live near the property to "keep an eye on it" or is that a bit pointless ?
Do those who do BTL tend to live near the property to "keep an eye on it" or is that a bit pointless ?
This article may be of interest:
The Bank of England chief economist has argued property is a better bet for retirement saving than a pension pot.
Speaking to The Sunday Times, when asked whether owning a property or a pension was better for retirement, Andy Haldane answered “almost certainly property”.
He says: “It ought to be pension but it’s almost certainly property.
“As long as we continue not to build anything like as many houses in this country as we need to meet demand, we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.
“I would quite like the day to come when that wasn’t the case, but we’ve got a lot of catching up to do.”
In May Haldane admitted he could not make “the remotest sense of pensions” and added “conversations with countless experts and IFAs have confirmed for me only one thing – they have no clue either. That is a desperately poor basis for sound financial planning.”
He told the newspaper: “I must admit that when I said that pensions were complicated, I hadn’t expected it to be a statement of great controversy.
“My experience since then has rather reinforced the impression that most other people find them quite complicated too.”
The Bank of England chief economist has argued property is a better bet for retirement saving than a pension pot.
Speaking to The Sunday Times, when asked whether owning a property or a pension was better for retirement, Andy Haldane answered “almost certainly property”.
He says: “It ought to be pension but it’s almost certainly property.
“As long as we continue not to build anything like as many houses in this country as we need to meet demand, we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.
“I would quite like the day to come when that wasn’t the case, but we’ve got a lot of catching up to do.”
In May Haldane admitted he could not make “the remotest sense of pensions” and added “conversations with countless experts and IFAs have confirmed for me only one thing – they have no clue either. That is a desperately poor basis for sound financial planning.”
He told the newspaper: “I must admit that when I said that pensions were complicated, I hadn’t expected it to be a statement of great controversy.
“My experience since then has rather reinforced the impression that most other people find them quite complicated too.”
J4CKO said:
Have long pondered doing BTL but never really been in a position to do so, myself and my wife are mid forties and our house is owned outright, was thinking that I have 20 years left to work or therabouts, if I started a BTL now then by the time I am ready to retire that the property, assuming 20 years of the rental paying the mortgage would be paid off ?
Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
It can be a PITA and councils that now tell people they must be evicted for them to help really don't help. I had tenants that thrashed a place in the 18 months they were there. I have tenants who also treated my house like their home and are still there 18 years later. It's not all plan sailing either, on one of them I have spent a shade over £10K on Windows/Doors/FSG.Not looking to make any money each month, just to get it set up and rolling and building equity in the property and then when we retire that would then become an income at that point.
Appreciate it can be a pain in the arse, a mate of mine had bad tenants and lost ten grand before he managed to get them thrown out.
Is there any way of working out what kind of rental you would get based on a certain property value or is it just market forces and demand ?
What is the best way to start learning about all this stuff ?
Yields tend to go on areas, so for South East 5%, Midlands 7%, North 9% but they are averages, Leasehold will reduce this, and so will keeping tenants, eg last tenants I took in paid market rates but as they are worth keeping I don't increase the rent in line with the market. If they moved out tomorrow then the rent goes up a min of 9% to bring it back in line with market.
Is it worth doing? Yes
But I'd avoid the low end areas
Has anyone had much success with student lets, specifically ones like this sort: http://www.rightmove.co.uk/property-for-sale/prope... ?
I was waiting for the student query to emerge. This is an area you must really do your homework on.
Well reported issues include: rising costs of university courses and associated living costs will begin to dampen demand; lower demand will close poorer performing organisations; higher value of university education versus other options is beginning to be eroded due to mass attendance. Choose your uni carefully.
Well reported issues include: rising costs of university courses and associated living costs will begin to dampen demand; lower demand will close poorer performing organisations; higher value of university education versus other options is beginning to be eroded due to mass attendance. Choose your uni carefully.
Student let's give a far greater yeild and return but there are downsides as well
Some sign for next year and don't show, places get wrecked, fire extinguishers let off, ovens get set on fire etc. People also move into places and then fall out which gets messy for them and sometime you to sort
I've got 2 flats in my portfolio (not student flats) and wouldn't buy anymore. Service charge amounts only go one way (up) which erodes profit and you are at the mercy of the leaseholder which pisses me off
Personally I'd avoid the sort of flat you mentioned and would buy a terrace house with two, 3 or 4 letting rooms upstairs along with at least 1 downstairs plus a lounge and kitchen. It might cost more but over the lifetime it will be worth more and deliver more income
Some councils restrict the amount of student housing and where it is. Something to check out if you venture down this route
Some sign for next year and don't show, places get wrecked, fire extinguishers let off, ovens get set on fire etc. People also move into places and then fall out which gets messy for them and sometime you to sort
I've got 2 flats in my portfolio (not student flats) and wouldn't buy anymore. Service charge amounts only go one way (up) which erodes profit and you are at the mercy of the leaseholder which pisses me off
Personally I'd avoid the sort of flat you mentioned and would buy a terrace house with two, 3 or 4 letting rooms upstairs along with at least 1 downstairs plus a lounge and kitchen. It might cost more but over the lifetime it will be worth more and deliver more income
Some councils restrict the amount of student housing and where it is. Something to check out if you venture down this route
rog007 said:
I was waiting for the student query to emerge. This is an area you must really do your homework on.
Well reported issues include: rising costs of university courses and associated living costs will begin to dampen demand; lower demand will close poorer performing organisations; higher value of university education versus other options is beginning to be eroded due to mass attendance. Choose your uni carefully.
Also forgot to mention, many universities are ploughing funds into their own student accommodation as it can be a gold mine. If they chose to decrease their rents or incentivise students in other ways then you could be looking at a significant void period especially if yours is one of the less nice houses. Completion is fierce in this sector. Well reported issues include: rising costs of university courses and associated living costs will begin to dampen demand; lower demand will close poorer performing organisations; higher value of university education versus other options is beginning to be eroded due to mass attendance. Choose your uni carefully.
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